CNBC's Courtney Reagan reports JC Penney is awaiting a judge's ruling on the company's ability to sell Martha Stewart products in its stores.

But, he said in his written ruling, "Macy's failed to prove by 'clear, unequivocal and convincing evidence' that it is entitled to a punitive damage award."

Macy's sued Penney and Martha Stewart Living after the two announced a partnership in December 2011. Macy's said the agreement breached its contract with Martha Stewart that included exclusive rights to Martha Stewart-branded cookware, bedding and bath products.